China Warns Against Funding Cryptocurrency Miners Through Initial Offerings
The National Internet Finance Association of China (NIFA), a self-regulatory organization focused on online finance, has issued a warning to investors on the so-called ‘Initial Miner Offerings’, in the latest sign of the mainland’s hostility to cryptocurrencies.
In a statement today, the NIFA warned that IMOs may be using misleading information as part of fundraising campaigns aimed at selling hardware for cryptocurrency mining, a process that describes the efforts undertaken to unlock more units of a digital coin.
The remarks further advised the public to remain cautious when dealing with the nascent fundraising mechanism, which it called a ”disguised ICO.”
The group, which works with the central bank and government agencies on regulatory matters, also stated that firms involved in IMOs may conduct their activities without complying with relevant applicable legislation, which entirely banned ICOs last year.
There has been no official statement regarding the ban of mining, but according to a leaked document published last week, China is moving to make an “orderly exit” bitcoin-mining operations following concerns of excessive electricity consumption and financial risk.
This vague stance regarding mining is quite troublesome as China accounts for nearly 70 percent of the global processing power devoted to crypto mining. The mainland is also home to the biggest creators of mining hardware, which usually also operate large mining pools.
A translated version of the document states that:
“China Internet Finance Association called for the vast number of consumers and investors should recognize the nature of the relevant model to enhance awareness of risk prevention, rational investment, do not blindly follow the trend of speculation. For the IMO model and various services that continue to operate ICO and ”virtual currency” trading venues for domestic residents by deploying overseas servers and discovering any involvement in illegal financial activities, they may report the information to the relevant regulatory authorities or the China Internet Finance Association, , May report to the public security organ. China Internet Finance Association members should strengthen self-discipline, resist illegal financial activities, do not participate in any involved in the ICO or hype “virtual currency” behavior.”